The Kerala High Court in the case of E.P. Gopakumar & Ors. V. Union of India & Ors. (2025) 45 J.K.Jain’s GST & VR 1 (Ker) has dismissed the writ petition, thereby full 18% GST will be payable on Health Insurance Premium payable by Senior Citizens.
Issues: The common issue involved in the writ petitions is regarding the question as to whether the petitioners are entitled to the exemption from payment of GST for the premium paid by them towards group insurance policy in the light of the notfn No. 16/2025-CT(R) dated 17.9.2025.
Arguments: According to the petitioners, they have joined together, only for the purpose of availing the insurance and apart from that, there was no commonality of purpose or they have not engaged in common economic activity. Therefore, the specific case of the petitioners is that, even though availed the policy as a group, would not fall under the ‘group’ and hence, the exclusions in Ext.P2 cannot be made applicable to the petitioners. Thus, the petitioners are entitled to the benefits of exemption since they are not falling under the exemptions of the said notification.
According to the Respondent the reliefs sought by the petitioners, by pointing out that, the respondents are not falling under the exemptions provided as per Ext.P2. The learned Standing Counsel also brought to the attention of this Court, the IRDA (Health Insurance) Regulations, 2016 (IRDA Reg.2016), wherein, it is contemplated that no group health insurance policy shall be issued by any insurer, wherein, group is formed with the main purpose of availing itself of insurance. There shall be a clearly evident relationship as specified by the Authority from time to time between the members of the group and the group policy holder.
Notfn.─Clause 36D of the notfn 16/2025-CT(R) dated 17.9.2025 reads as follows:
“36D Heading 9971 Service of health insurance business provided by an insurer to the insured, where the insured is not a group [Please refer to clause (zfb) in para 2]
Explanation: For the removal of doubts, it is hereby clarified that:
a. This exemption shall apply to a contract of insurance where the insured is an individual, or an individual and his family,
b. For the purposes of (a) above, family shall include all individuals insured as family in the contract of insurance.
The said clause deals with the exemptions relating to the services of the health insurance provided by an insurer to the insured where the insured is not a group. The aforesaid notfn was issued in exercise of the powers conferred by S.9(3) and S.9(4), S.11(1), S.15(5) and S.148, CGST ACT, 2017. As per the said notfn, certain amendments were brought in the notfn No.12/2017 dated 28.6.2017. As per clause (b)(ii) of the notfn dated 17.9.2025, after clause (zfa) of the original notfn sought to be amended, clause (zfb) was inserted and the said clause reads as follows:
“(zfb) For the purposes of entries at serial numbers 36C and 36D in the table above, ‘group’ means group of persons who join together with a commonality of purpose or for engaging in a common economic activity, other than availing insurance, and includes:
a. Employer-employee groups, where an employer-employee relationship exists between the master/group policyholder and the members of the group in accordance with the applicable laws;
b. Non employer-employee groups, where a clearly evident relationship exists between the master/group policyholder and the members of the group, for services/activities other than insurance.”
Objectives of Amendment.─ The exemption of GST is provided on all individual health insurance policies (including family floater policies and policies for senior citizens) and reinsurance thereof, to make insurance affordable for the common man and increase the insurance coverage in the country.
Conclusion of Court─11. The crucial aspect to be noticed is that, admittedly, the policy is issued by a general insurance company, which can only issue a policy, as permitted by the IRDAI, the sole regulatory body in this field. As rightly pointed out by the learned Standing Counsel for the respondents, clause 7 of the IRDAI Reg.2016, specifically prohibits forming of a group with the main purpose of availing itself of an insurance. Thus, the fact that, the policy was issued to a large number of persons extending to more than 1.5 lakhs persons by a general insurance company bound by the regulation issued by the IRDAI, itself indicates that the said policy was issued in terms of the relevant regulations. As mentioned above, the regulation contains a clause prohibiting forming a group, exclusively for the purpose of availing insurance coverage and there must be some relationship between the members of the group and the group policyholder. Therefore, the issuance of policy by following the regulations of IRDAI itself would indicate that the said policy was issued to a group, where, there is an evident relationship between the members of the group and the policyholder.
12. Apart from the above, I find merits in the contentions raised by the respondents that the policies which are relevant in these cases are obtained by the IBA through collective bargaining. The benefits of the said collective bargaining are clearly explained in the counter affidavit of the 2nd respondent in WP(C)No.38436/2025. In paragraph 20 thereof reads as follows:
“a. Cost Savings Passed to Members: Insurers save on distribution, underwriting, and policy administration costs in group policies. These savings are typically passed on to the insured members in the form of lower premiums.
b. Lower Premiums: Premiums under group health insurance are generally lower than those for individual policies, owing to risk pooling across a larger group and the inherent homogeneity of group members.
c. Minimal or No Medical Underwriting: Coverage is often extended without detailed medical checks, particularly in employer-employee groups.
d. Coverage for Pre-existing Conditions: Many group policies cover pre-existing diseases from day one or after a relatively short waiting period, unlike retail policies which may have longer exclusion periods.
e. Family Coverage: Many Groups allow members to extend coverage to spouses, children, and, in some cases, parents at competitive rates.
f. Voluntary Top-up Options: Several group plans offer optional top-up cover at preferential rates, allowing members to enhance their base coverage.
g. Streamlined Administration: Insurers often provide dedicated account managers, digital portals, or HR dashboards to facilitate smooth policy administration for the employer or group administrator.”
Evidently, in this case, the petitioners have availed advantages as highlighted above, which show a clear distinction between the individual policy and group insurance policy. It is also to be noted in this regard that, as observed above, Ext.P1 which is the recommendations of the GST Council, provides exemption only to individual health insurance policies and the said fact is further reinforced by the wordings used in clause 36D of notfn dated 17.9.2025, where, it is specifically mentioned that the exemption is for individual policies and not for a group. It is further clarified in the Explanation in the said notfn that, the said exemption shall apply to a contract of insurance where the insured is an individual or an individual and family of the said individual. All these aspects clearly indicate that the exemption was provided only to the individual policy holders and not the members of a group insurance policies.
13. Of course, the learned Senior Counsel appearing for the petitioners pointed out that, the definition of ‘group’, as mentioned in Ext.P2, even though similar to the definition of ‘group’ as contained in the IRDAI regulation, there is a subtle difference between the two. It was pointed out that, in the definition of ‘group’ as contained in IRDAI regulation, the group consists of persons who joined together with a commonality of purpose or engaging in a common activity, whereas in Ext.P2 notfn, the ‘group’ is a group of persons who joined together with a commonality of purpose or for engaging in a common activity “other than availing insurance”. Thus, according to the petitioners the specific inclusion of the words “other than availing insurance” is very important and by virtue of inclusion of the said clause in the definition of ‘group’ in Ext.P2, the groups, which are formed together only for the purpose of availing the benefit of insurance should be exempted. While considering the said contention, it is to be noted that, going by the Regulations of the
IRDAI, there is no policy contemplated for a group which is formed for the sole purpose of availing the insurance and there must be a relationship between the members of the group and the policy holder. As mentioned above, the policy in this case was issued in terms of the IRDAI Regulations and therefore that by itself is a certification of the fact that it was a policy issued to a group, as defined under the provisions of the IRDAI Regulations and therefore, the fact that, in the definition of ‘group’ included in Ext.P2 contains a clause that “other than availing insurance”, would not make a difference.
14. The documents produced before this Court and the sequence of events that led to the issuance of the policy also clearly establishes the relationship between the members of the policy and the policyholder. As mentioned above, Ext.P3 would indicate that the scheme of insurance policy itself was introduced as part of 10th Bipartite Settlement/7th Joint Note dated 25.5.2015 and later the benefits of the same were extended to the retired employees. A detailed procedure is followed by the IBA, which floated a tender to find out an insurer who can provide a better package at a lesser price. Thereafter, a contract was entered into between the said insurer and the IBA. Rates of premium were also fixed after such negotiations/proceedings between the IBA and the Insurance Company. Thus, the IBA, for all practical purposes, was acting as an intermediary and after a collective bargaining, better rates of premium were fixed with additional benefits, which were not otherwise available for individual policyholders. Apart from the above, this particular policy is issued for the welfare of the retirees from various banks who by themselves formed into a class, on account of their prior employment with the banks. Thus, there is a commonality of purpose behind the join together of the members of the Association and the IBA, which is bound to ensure the welfare of the retired employees of the banks, while extending the benefits of group insurance policy. Therefore, under no circumstances, the contentions raised by the petitioners can be accepted.
15. When it comes to the decisions relied on by the petitioners, it is to be noted that, the decisions of the Hon’ble Supreme Court in Achal Industries and T.S.Devinatha Nadar (supra) were relied on to show that, when there is a doubt as to the meaning of a provision in fiscal statute, it must be construed in favour of the tax payers. However, the question to be considered in these cases, is not in relation to the interpretation of the provision in the taxation statute which deals with the imposition of tax, but on the other hand, the interpretation is that of the relevant clause in a statutory notfn intended for an exemption contemplated under the Act from the obligation to pay the tax. When it comes to the exemption from tax, the settled position of law is that, when there is doubt as to the interpretation, the benefit of the same should go to the State. Of course, the learned Senior Counsel Sri. R.Lekshmi Narayanan, appearing for IBA, relied on the observations made in Commissioner of Customs (Preventive) and Subhas Chandra Bose (supra) where it was observed that, the rule regarding exemptions is that, the exemptions should generally be strictly interpreted, but beneficial exemptions having their purpose as encouragement or promotion of certain activities, should be liberally interpreted. However, the question of strict interpretation does not arise in this case, as going by the stipulations contained in Ext.P2 particularly clause 36D thereof, there is no ambiguity, particularly when it is taken into consideration in the light of the recommendations of the GST Council, as reflected in Ext.P1. The intention is very specific, which is confined to the individual policies only, and not to the group insurance policies.
16. Of course, there could be a doubt with regard to the definition of ‘group’ as contained in Ext.P2, in respect of the groups which are formed solely for the purpose of availing the insurance policy. However, since the IRDAI Regulations does not contemplate for a policy in respect of a group which is formed solely for the purpose of insurance coverage, the policies which are the subject matter in these writ petitions, cannot be construed as policies, that are issued for a group, which are solely constituted for the purpose of insurance coverage. Therefore, I find no merits in the contentions raised by the petitioners. As mentioned above, the exemption provided as per the notfn No.16/2025-CT(R) dated 17.9.2025, is intended to cover the individual policies alone, and not for the group insurance policies issued based on the understanding reached between the IBA and the Insurance Company followed by collective bargaining. In such circumstances, I do not find any merits in these writ petitions and accordingly, these writ petitions are dismissed.
Subsequent Developments.─ In an appeal filed before the double bench, an Interim Stay on levy of GST on Health Insurance premium paid by the retirees and pensioners of commercial banks under IBA Group Medical Insurance Policy, has been granted by the court on 19.1.2026: (2025) 45 J.K.Jain’s GST & VR 22 (Ker). The order of the court is as under;
“Admit. Post on 23.2.2026. Till then, there shall be an interim order directing the respondents not to levy GST for the insurance premium paid by the retirees and pensioners of commercial banks under IBA Group Medical Insurance Policy. The above direction is issued in view of the undertaking made on behalf of the appellants that in case the writ appeal is decided against them, the GST component will be satisfied.”
Our analysis.─1.The court has totally ignored the following aspects;
a. Specific entry under HSN Code 9971.
b. Specific explanation in the entry and clause (zfb), giving definition of “Group”.
2. Ignoring the Specific entry with explanation and clause(zfb), of notfn No. 16/2025-CT(R) dated 17.9.2025. The court has based its conclusions on the strenuous factors, which is against the ratio decidendi of Hon’ble Supreme Court cases.
3. The court has ignored the basic objective of amendment brought by the Govt. to strengthen the Health of Indians at a lesser cost for retirees.
4. I have also covered further details in my article published in (2025) 45 J.K.Jain’s GST & VR , pages A1 to A-2, titled “Exemption from GST on Health Insurance Premium”.
******
CA Om Prakash Jain s/o J.K.Jain, Jaipur |Tel 9414300730/0141-3584043
Author Bio
